0Business Strategy for Sustainable Growth
We view climate change and biodiversity not only
as a risk but also as a business opportunity.
Harnessing the power of flavor and fragrance
creation, we will contribute to people’s prosperity
and health and achieve sustainable growth.

Megatrends & changes
in business environment

Japan:
 Population decline, low birth rates,and population aging
Global: Intensifying disputes between
nations and regions
 Rising standard of living inemerging nations
 Increasing foreign exchange risks
 Industry oligopoly Food shortage due to rising global
population

Impact on T.Hasegawa

Climate change and the deterioration of natural capital pose a variety of risks, such as the reduced yield and deteriorated qualityof natural raw materials and stricter regulations. On the other hand, the increased demand for alternative food flavors andenvironmentally friendly products such as those that use less plastic due to increased environmental and health awareness, aswell as the improved reputation of sustainability-related initiatives, will also create many business opportunities. In line withthese future environmental changes, the T.Hasegawa Group aims to contribute to creating an enriched society and achievesustainable growth by using its flavor and fragrance technology to help solve the world’s problems.
In March 2022, the T.Hasegawa Group announced its support for the TCFD (Task Force on Climate-related Financial
Disclosures) recommendations. The Group is also working to disclose information in accordance with the disclosure
recommendations of the TCFD and the TNFD (Taskforce on Nature-related Financial Disclosures).

The T.Hasegawa Approach

Business opportunities

Increase business opportunities

 Identify new business
opportunities in Japan Expand demand for flavors andfragrances in emerging nations
 Respond to diversifying
customer needs
 Increase demand for alternative
raw materials and alternatives tonatural raw materials
 Increase demand for beverages
and chilled or frozen desserts
driven by rise in temperatures
 Increase value of the “flavor andfragrance” database Improve reputation forsustainability initiatives

 Create framework for providing diverse flavors
and fragrances that are safe, reliable, andsuited to customer preferences Overseas local procurement and local
production
 Sustain R&D investments
 Strengthen technology and innovation based ontrends: Secure and develop human resources,
utilize databases and AI> Building new business model Speedy development: Rapidly identify andrespond to customer requests and latent needs Detailed customer service

Risks & challenges

Risk mitigation

 Fully develop domestic market
 Impact currency exchange
fluctuations on sales and profits Grow gap between global
corporations
 Impact of natural disasters on
our business Conflict and climate change
making natural raw materials
more expensive and harder toobtain Increase raw material andenergy prices
 Increase stringent regulations
and demands related tosustainability

 Reinforce raw material inventory managementand diversify purchasing routes
 Develop efficient production system and stableproduct supply Decline surplus inventory
 Risk dispersal for overseas local procurement
and local production
 System for highly reliable quality assurance andprocess management by expanding inspection
system and adopting strict standards
 Environmentally friendly product design andmanufacturing, as well as environmental safety
audits Effective use of waste and improvements todeodorizing facilities

Business strategy

Increase flavor andfragrance compounds

Secure earnings
in Japan

Our Purpose

Expand overseas
business“Production” of high-quality and safe products

Procurement

Production

The powerof flavor andfragrance
creation

R&D

Sales andMarketing“Creation” of the one and only flavors andfragrances around the world

Contributeto creation ofenriched society
through flavors
and fragrances

Innovation

Contribution to SDGs
 Many disasters due to climatechange Decreasing biodiversity
 Reducing crop yield Increased awareness ofsustainability
 Consumer trends toward healthand environmental consciousness
 Diversifying consumer
consciousness and purchasing
habits Advancing digitalization and AI

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Procurement

Environment

Human rights
and labor

GovernanceFair business activities

Quality safety

Company Creed &management policies

1

1

The Group has added the content of the nature-related risk analysis based on the TNFD to the climate change risk analysis based on the TCFD previously
conducted, and from this fiscal year, the Group is conducting integrated information disclosure. The following item describes the general requirements
based on the TNFD’s disclosure recommendations.

General Requirements

 Application of materiality
In assessing nature-related risks and opportunities, we have adopted a single materiality approach, consistent with the Group-wide risk management and TCFD
disclosures, to assess the impact of natural capital on its business.

 Scope of disclosure
The subject of analysis in this disclosure is the flavor and fragrance business (production and sale of flavors and fragrances), which is our main business. To
produce flavors and fragrances we use a wide variety of raw materials, including those derived from petroleum. However, for the upstream value chain analysis,
we selected key plant-derived raw materials such as vanilla, coffee, and lemon, which have a relatively high dependence and impact on natural capital, to be
included in the analysis.
Upstream value chain
Growing raw
materials

Processing
raw materials

Direct operations
Distribution

Production offlavors andfragrances

Downstream value chain
Distribution

Production of
products using flavors
and fragrances

Sales ofproducts

Use anddisposal of
products

 Location of nature-related issues
For the raw material production sites, sourcing sites, and Group sites included in the scope of the analysis, we identified the location information and assessed
whether the sites fell within the priority areas identified by the TNFD. For those sites where location information could not be confirmed at this time, approximate
locations and ranges are estimated based on publicly available information. In addition, due to the difficulty of obtaining information on distribution anddownstream of the value chain, we have not identified the location at this stage. See the Strategy section for specific analysis results.

 Integration with other sustainability-related disclosures
Risks and opportunities related to climate change and biodiversity are organized in an integrated manner in this disclosure.

 Time horizons considered
Short-term (2024), medium-term (2030), and long-term (2050) time frames are used to assess risks and opportunities.

 Engagement with indigenous people, local communities, and affected stakeholders
The Group conducts stakeholder engagement through supplier evaluations and other means in accordance with the T.Hasegawa Group Procurement Policy(For more information, refer to our Sustainability Report). For some raw materials, we also visit overseas production sites to communicate directly withproducers and suppliers.

Copyright© T.HASEGAWA CO., LTD. All rights reserved2Strategies

The Group has added the content of the nature-related risk analysis based on the TNFD to the climate change risk analysis that is derived from the TCFD
previously conducted, and from this fiscal year, the Group is conducting integrated information disclosure. In our analysis, we followed the LEAP
approach presented by the TNFD, as the climate change component is included in the scope of the TNFD disclosure recommendations. In the following
sections, we will explain how to proceed with an analysis based on the Locate, Evaluate, Assess approach in LEAP.

Locate interfaces with nature
We identified and estimated the locations of raw-material production sites, sourcing sites, and our Group’s sites, as well as confirmed the locations of sites related to
our Group’s business. We also assessed the identified sites based on the TNFD’s LEAP approach to identify priority areas for consideration.
• Northeastern Madagascar, where vanilla is grown, is located in an area of high biodiversity importance.
• Some of the lemons used by the Group are grown in Spain and Italy, both of which are water-stressed areas, etc.

Evaluate dependencies and impacts
Using ENCORE, a tool for identifying and assessing the dependencies and impacts of business activities on nature, we identified the nature and magnitude of thedependencies and impacts associated with each process in the value chain, and summarized them in a heat map.

[Heat map of dependence/impact] * VH: Very High; H: High; M: Medium; L: Low; VL: Very Low

L

Distribution

Directoperations

Production of flavors andfragrances

H

Downstream

Production of products
using flavors andfragrances

VH VH

Sales of products

H

VL

VL

L

L

VL

M

M

L

VL

L

L

M

L

H

M

M

L

M

L

H

M

L

H

L

H

L

VL

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H

H

H

H

H

H

H

M

H

L

L

H

H

H

H

H

H

H

M

M

M

H

H

H

M

M

Noise, vibration, light
pollution

Greenhouse gas emissions

H

L

H

H

Other

Use of marine ecosystems

Use of terrestrial
ecosystems
Use of freshwater
ecosystems

Water use

L

Solid wasteL

H VH VH VH VH VH VH VH VH

Air pollution

L

Pest control

Pollutant filtration

L

Protection from soil erosion

Dilution by water or air

MProtection from wind andflood damage

Cleanup of pollutants

VL VL M

Disease control

Maintaining water quality

VH VH

Stabilization of the climate

Maintaining the water cycle

M

Reduction of noise andlight pollution
Regulating the flow ofrivers, etc.

Ventilation by plants

M

PollinationM

Use of surface water

VH H

Use of groundwater

L

Soil pollution

Processing
raw materials

M VH H VH VH

Water pollution

Upstream

VL M

Impacts

Maintaining soil quality

Growing raw materials

Provision of textiles andother materials
Provision of genetic
resources

Process

Livestock-related labor

Dependencies

H

3

The Group has added the content of the nature-related risk analysis based on the TNFD to the climate change risk analysis that is derived from the TCFD
previously conducted, and from this fiscal year, the Group is conducting integrated information disclosure. In our analysis, we followed the LEAP
approach presented by the TNFD, as the climate change component is included in the scope of the TNFD disclosure recommendations. In the following
sections, we will explain how to proceed with an analysis based on the Locate, Evaluate, Assess approach in LEAP.

Strategies

Assess risks and opportunities
Based on the results of the Locate and Evaluate analyses, we identified risks and opportunities and assessed their impact on our Group. Physical risks wereassessed under a scenario in which climate change progresses (scenario of 4ºC global warming) and under the assumption that natural capital is lost andecosystem services are reduced. Transition risks were assessed based on a scenario in which decarbonization is realized (1.5ºC and less than 2ºC global warming
scenarios), as well as on the assumption of a situation in which society is transformed towards the protection of natural capital. Opportunities are described taking
into account the categories of opportunities identified by the TNFD and the physical opportunities identified in the climate change risk analysis (opportunities arisingfrom the scenario of 4ºC global warming).
In response to these risks and opportunities, the Group aims to help realize an enriched society and achieve sustainable growth through thorough risk management,
while seizing business opportunities through innovation based on the power of flavor and fragrance creation.

[Major risks and opportunities]
Item

Physical risks

Category

Name

Description

ImpactConcept of impact

Term

Acute
Chronic

Increased cultivation costs
due to deterioration of
ecosystem services

Deterioration of ecosystem services such as pollination services andmaintenance of soil quality, as well as severe wind and flood damage
due to climate change, and rapid increases in pest and disease damage,
may worsen the yield and quality of the raw-material crops.

MediumFor some of the raw materials we purchase,
there are concerns about reduced yields,
deteriorating quality, and rising prices.

Short
MediumLong

AcuteInterruption of production at
suppliers due to drought

There is a possibility that drought may interrupt production activities atfactories and other facilities of suppliers.

Small

Acute

Disruption of the distribution
network due to wind andflood damage

Wind and flood damage may disrupt the distribution network.

Small

Acute

Interruption of production at
our Group’s sites due towind and flood damage

Natural disasters such as floods may affect the Group’s sites, resulting indamage to facilities and equipment, interruption of business operations,and other effects.

Large

Extinctions and population declines of organisms may continue, reducing
the number of species available for use in flavor and fragrance creation.

MediumChronic

Policy / Regulatory
Transition
risks

Policy / Regulatory

Policy / Regulatory

Decrease in species
available for flavor andfragrance creation
Increased cultivation costs
due to environmental laws
and regulations
Increased production costs
due to environmental laws
and regulations (Suppliers)
Increased distribution costs
due to environmental laws
and regulations

In the areas where crops used as raw materials are grown, stricter laws
and regulations regarding the expansion of farmland and the use offertilizers and pesticides may increase the cost of response at suppliers.
At our suppliers’ factories and other facilities, stricter laws andregulations on greenhouse gas emissions, water withdrawal, pollutant
emissions, plastic disposal, etc. may increase the cost of response.
In the distribution industry, stricter laws and regulations regarding
greenhouse gas emissions, air pollution, noise and light pollution, etc.,
may increase the cost of response.

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Small

Small

Small

Based on the proportion of raw materials
related to water-scarce areas, we expect the
impact to be limited.
There are concerns about difficulties inprocurement, quality deterioration, and priceincreases of some of the raw materials wepurchase.

There are concerns about damage tofacilities and business interruption due toflooding in some locations at high risk offlooding.
There is concern that sales and profits will
decrease due to a decline in R&D
capabilities.
We expect price increases due toenvironmental laws and regulations to belimited for raw-material crops.
If the response costs are passed on to
prices, there is concern that raw-material
prices will rise.
Due to the low proportion of distribution
costs in procurement costs, we expect the
impact to be limited.

MediumLong
MediumLong

MediumLong

Long
MediumLong
MediumLong
MediumLong

4

Strategies

The Group has added the content of the nature-related risk analysis based on the TNFD to the climate change risk analysis that is derived from the TCFD
previously conducted, and from this fiscal year, the Group is conducting integrated information disclosure. In our analysis, we followed the LEAP
approach presented by the TNFD, as the climate change component is included in the scope of the TNFD disclosure recommendations. In the following
sections, we will explain how to proceed with an analysis based on the Locate, Evaluate, Assess approach in LEAP.

[Major risks and opportunities] (continued)
Item

Transition
risks

Category

Name

Policy / Regulatory

Increased production costs
due to environmental laws
and regulations (TheGroup)

MarketDescription

ImpactConcept of impact

Term

Stricter laws and regulations on greenhouse gas emissions, water
withdrawal, and plastic disposal at the Group’s production sites could
increase the financial burden of carbon pricing and equipment
installation.

MediumDue partly to carbon pricing and equipment
installation, we expect some financial
burden to be incurred.

MediumLong

Increased demand forsome raw materials

There is a risk that the demand for some raw materials as biomass fuelsand biomass plastics may increase and prices may rise.

Small

Based on the proportion of the relevant raw
materials among the total procurement items,
we expect the impact to be limited.

MediumLong

Technology
MarketReputational

Decrease in sales due tochanging customer
preferences

The Group’s delay in responding to the growing customer preference for
products with low environmental impact and for companies with anadvanced environmental response could hinder its competitiveness.

MediumThere is concern about a decline in sales
due to delays in environmental response
and R&D.

MediumLong

Reputational

Reputational loss due tonegative supplier impact

The Group’s reputation could suffer if suppliers are found to bedamaging natural capital, which could lead to inconsistencies with theprocurement policy.

There is concern that a decline in the ESG
score could lead to a drop in stock prices
and litigation.

MediumLong

Reputational

Decrease in ESG score

The Group’s reputation could be damaged by delays in addressing anddisclosing information on climate change, natural capital, and biodiversity.

Small

There is concern that a decline in the ESG
score could lead to a drop in stock prices
and litigation.

MediumLong

MarketProducts and services
Reputational capital

Increase in sales due tochanging customer
preferences

The Group’s progressive response to the growing customer preference
for products with low environmental impact and companies withadvanced environmental response can improve the Group’s
competitiveness.

MediumSales are expected to increase due to thedevelopment of environmentally friendly
products and an improved ESG score.

MediumLong

Products and services

Increased Demand forBeverages, Frozen
Desserts, etc. due to Rising
Temperatures

Rising temperatures are expected to increase sales of soft drinks, ice
cream, and other cold desserts, and increase demand for added flavors.

Small

For sports drinks, we expect sales to rise by
several percent as of 2030 due to risingtemperatures. Sales of flavors andfragrances are also expected to increase.

MediumLong

MarketReputational capital

Improvement of ESG score

The Group’s reputation could be enhanced by recognition of its
progressive response to climate change, natural capital and biodiversity,and information disclosure.

MediumThe ESG score is expected to improve,leading to an increase in stock price.

Cash flow /Financing

Diversification of financing
methods

Medium

It is expected that the cost of upgrading tofacilities with lower environmental impact
and the cost of developing environmentallyfriendly products will be financed throughgreen bonds and green loans.

MediumOpportunities

Green financing may become more active.

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MediumLong

MediumLong

5

Climate Change and Natural Capital Initiatives

The following summarizes the Group’s climate change and natural capital initiatives by category.
Refer to our Sustainability Report for details on our initiatives and progress toward our goals.

 Procurement initiatives

 Product development initiatives

Establishment of the T.Hasegawa Group Procurement
Policy and the T.Hasegawa Group Supplier Guidelines

Technology to reduce the use of natural flavors andfragrances

We have established the T.Hasegawa Group Procurement
Policy and the T.Hasegawa Group Supplier Guidelines toinform our suppliers of the Group’s policies on legal
compliance, ethics, human rights, and the environment,
and to promote responsible procurement throughout the
supply chain.

By developing aroma analysis methods and improving theaccuracy of analysis of trace aroma components, we arepromoting the elucidation of the composition of aroma
components in natural products, which is useful for thedevelopment of technologies to substitute natural flavors
and fragrances and reduce the amounts of natural flavors
and fragrances used.

Implementation of supplier assessment
To promote responsible procurement, we assess suppliersin the areas of human rights, labor, environment, faircorporate activities, quality and safety, information security,
supply chain, local communities, corporate governance,
etc.
Risk management for raw-material procurement
The Group procures more than 3,000 items fromapproximately 400 suppliers around the world. In
procurement, we manage risk by diversifying purchasingroutes and carefully managing raw material inventories. In
addition, information on procurement-related risks iscollected by the Procurement Division and managed andverified by the Risk Management Committee, which ischaired by the President & CEO and includes members of
the Board of Directors, to ensure appropriate responses.
Procurement of certified raw materials
We purchase some of our ingredients from farms thathave obtained the Japan Good Agricultural Practices(JGAP) certification, ASIAGAP certification, and Rainforest
Alliance certification.
Procurement of perilla oil
To procure perilla oil, which is one of Japan’s mostdistinctive flavor and fragrance raw materials, we
collaborate with a producers’ association to support stableproduction in terms of quality and quantity as well as forbusiness continuation.

In response to the shortage of vanilla beans, we aredeveloping substances that can produce a vanilla taste
even with a reduced amount of vanilla beans, by applying
compounded flavor and heat-reaction technology.
We also offer a series of flavors that can replace savory
natural raw materials and alternative compounded flavor
for citrus essential oils.
We are switching to an upcycled process that uses
processing by-products as a substitute for ingredientscontained in rare plants protected by the Washington
Convention.
Flavors that help to reduce the use of oil and fat
ingredients
Koku Jyuwa®, which is generated by using the power ofenzymes in natural vegetable fats and oils, helps to reduce
the use of oil and fat ingredients where there are supply
concerns by imparting a rich, full-bodied effect to foods.
Flavors that improve the taste of plant-based foods

We have developed Plant React®, an ingredient that adds
the favor and taste of animal products to plant-based food.
It is effective in reducing environmental impact, helping to
reproduce the characteristic flavors of animal products.

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Flavors and fragrances that help to reduce plastic
usage
We have developed Carbonation Enhancer®, which
supplements the sensation of carbonation, helping to
reduce the thickness of PET bottles and saving resources.
Production process improvement that takes green
chemistry into accountWe use the IFRA Green Chemistry Compass, which is
published by the IFRA, to evaluate the conformity of ourchemical processes to green chemistry based on the 12
articles related to green chemistry. We are working to
improve production processes that reduce environmental
impact, such as reducing the amount of solvent used,replacing toxic substances, and developing
environmentally conscious ingredients.
Improvement of the R&D environment
We are implementing various measures to improve our
R&D environment to develop better products, including
investment in R&D, use of marketing data and AI, active
exchange of views with universities and research
institutions, and analysis of customer requests and latentneeds.
 Initiatives on greenhouse gas emissions
Reduction of greenhouse gas emissions and energy
consumption
We have set a greenhouse gas emissions reduction target
for FY2030 and are working to achieve it. We also procure
green power at our head office building, R&D Center,Fukaya Facility, and Itakura Facility.
To reduce energy consumption, all boilers in the
Production Division have been replaced with new models
and fuels with lower greenhouse gas emissions and higher
combustion efficiency, and special high-voltage powerreceiving and transforming equipment and energy
monitoring systems have been installed. In addition, theFukaya Facility and the Itakura Facility have establishedenergy usage optimization standards.

6

Climate Change and Natural Capital Initiatives

 Water use initiatives
Reduction of water usage
We have been promoting reduction of water usage byscaling down the use of cooling water through theimplementation of better manufacturing methods and by
reducing the use of water through the optimization ofcleaning methods and additions of cooling water recycling
equipment. The company-wide Environmental Safety
Committee sets numerical targets using data on theamount of water used in the past. The Production Division,in which water usage is particularly high, reports thereasons for the increased or decreased usage and the
reduction measures implemented every month.
 Wastewater initiatives
Wastewater treatment initiatives
Wastewater from production facilities is treated through atertiary treatment process. Wastewater from the R&D
Center, meanwhile, is treated through to the secondary
treatment process before being discharged to the sewer
system. We comply with wastewater standards in terms ofregulation values and the like as prescribed in the Water
Pollution Control Law, prefectural ordinances, andagreements with communities.
 Initiatives on waste products
Reduction of plastic waste
Although it is difficult to reduce plastic container use due tothe characteristics of our Group’s products, we separate
plastics used within the Group that can be recycled andthen endeavor to use them effectively.
Composting of post-extraction residues
At Koumi Compose Co., Ltd. (45% investment by theCompany), botanical residue from our Company, which is
generated after extracting natural ingredients, goes
through fermentation composting for use by highlandvegetable farmers. In addition, from the viewpoint of stableprocurement of domestic raw materials for flavors andfragrances and realization of a circular economy, theThe following summarizes the Group’s climate change and natural capital initiatives by category.
Refer to our Sustainability Report for details on our initiatives and progress toward our goals.

Group is conducting experimental cultivation oflemongrass using this compost in Koumi-machi.

Product risk assessment (risk assessment ofchemical substances)

Other waste separation and recycling

At our factories, we conduct risk assessments of chemical
substances based on the SDSs of raw materials andintermediate products, consider risk reduction measures,and reflect the results in work procedures. In addition,
employees regularly receive education on the danger,
harm and appropriate handling of chemical substancesand chemical regulations in and outside Japan.

We work to promote waste separation and resource
recycling of waste cans, paper, waste glass, oil, and so on.
We also strive to limit the generation of landfill waste.
We outsource the processing of cans with minimal odortransfer to a company that manufactures recycled cansand some of the waste liquids to a company thatspecializes in reuse technology.
Waste treatment audits
When choosing waste service companies that treat thewaste we generate, we visit their treatment site and also
conduct periodic audits. As part of our environmental
safety audit once a year, we check the Fukaya Facility, theItakura Facility, the R&D Center, and our head office toexamine the waste treatment conditions. Immediate
corrective action is taken for items that need it.
 Initiatives on chemical substance management
Compliance with laws and regulations regarding
chemical substances

The R&D Center conducts risk assessments of all
chemical substances used in the factories according to theIndustrial Safety and Health Act, prepares a measure
sheet according to the risk level, and puts it on theintracompany website.
At our overseas subsidiaries, we also implement
management measures according to the actual situation
there.
Management of substances applicable to the PRTR
We manage chemical substance emissions by specifying
flavors and fragrances applicable to the Pollutant Release
and Transfer Register (PRTR) and substances to be
voluntarily controlled.

From the viewpoint that the components of flavors andfragrances we handle are chemical substances, we
comply with related laws as follows (Refer to the
Sustainability Report for details on each item.).
1. Applications for registering new chemical compounds inaccordance with Japanese laws
2. Publication of Safety Data Sheets (SDSs) supporting
the Globally Harmonized System of Classification andLabelling of Chemicals (GHS)
3. Information management and response to chemical
regulation trends in each country and law amendments inJapan
4. Overseas subsidiaries implementing measures tocomply with local laws and regulations
Vegetable field (Koumi-machi, Nagano)
Copyright© T.HASEGAWA CO., LTD. All rights reserved

7

Climate Change and Natural Capital Initiatives

The following summarizes the Group’s climate change and natural capital initiatives by category.
Refer to our Sustainability Report for details on our initiatives and progress toward our goals.

 Initiatives on wind and flood damage response Biodiversity conservation initiatives

Developing business continuity plans and conducting
trainings

Establishment of a biotope at the R&D Center

We have established and are operating business
continuity rules and their subordinate rules, the business
continuity guidelines, in order to continue the Company’sbusiness in the event of a contingency such as disasters
or crisis. We conduct annual firefighting training andregular safety confirmation training based on a large-scaledisaster scenario to increase their effectiveness.
 Initiatives on information disclosure and external
collaboration
Information disclosure and response to the ESG scoreThrough platforms such as CDP, EcoVadis, and Sedex,
we disclose the Group’s ESG response status andpromote recognition of issues and improvement activities.
We also respond to supplier surveys requested from
customers as needed.
We analyze and disclose risks and opportunities related toclimate change and natural capital in accordance with thedisclosure recommendations of the TCFD and the TNFD
(as presented in this document).
We publish our Sustainability Report (including ESG Data
Book and GRI Standard Index) on our website every year.
Endorsement and participation in organizations andinitiatives

A biotope that comprises plantings of mainly native
species, a pond, and a stream has been created on thepremises of the R&D Center, and is used as a habitat forbirds, amphibians, aquatic insects, and other animals in
the area.
 Initiatives on policy formulation and education
Environmental policy formulation, certification,
education, etc.
We have established the Environmental Philosophy toclarify our stance towards environmental protection, andhave formulated the Environmental Safety Activity Policy
and the Environmental Policy based on ISO 14001 inorder to embody the philosophy. The Fukaya Facility, theItakura Facility, and the R&D Center obtained ISO 14001
environmental management system certification.

We actively provide environmental education toemployees by delivering training and information throughthe intracompany website, holding seminars and study
sessions on environmental issues, and conducting
education and training when they join the company.
To ensure efficient and effective environmental protection
activities, we referenced the Environmental Accounting
Guidelines published by the Ministry of the Environment
for conducting environmental accounting.

We have signed the IFRA-IOFI Sustainability Charter and
UNGC (United Nations Global Compact), participated in
the RSPO (Roundtable on Sustainable Palm Oil) andJaSPON (Japan Sustainable Palm Oil Network), and haveendorsed and participated in various sustainability
initiatives.

A biotope on the R&D Center premises

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8

The status of the disclosure metrics presented by the TNFD is shown below. Unless otherwise noted, the scope of coverage is on a domestic consolidated
basis and the period covered is fiscal year 2023 (October 2022 to September 2023). The numbers in the table correspond to the TNFD metric numbers.
For items under consideration, we will discuss the response policy and collect information for future updates.
In addition, we will explain the Group’s climate change and natural capital goals.

Indicators and Targets[Core global disclosure metrics: dependencies and impacts]#—

Indicator

StatusGreenhouse gas emissions

Refer to the Sustainability Report

Total surface area controlled/managed by the organization
C1.0

Total spatial footprint

Total surface area: 0.24864886 km2• Head office: 0.00059653 km2• Fukaya Facility: 0.0689828 km2• Itakura Facility: 0.17131648 km2 *1• R&D Center: 0.00772504 km2• Kajiyacho Bldg.: 0.00002801 km 2 *2

Total disturbed area
N/A *3
Total rehabilitated/restored area
Extent of the change in use of the land/freshwater/ocean
ecosystem

C1.1

Extent of change in
use ofland/freshwater/ocean

Extent of land/freshwater/ocean ecosystem conserved or
restored

Extent of land/freshwater/ocean ecosystem that is sustainably

managed
C2.0

Pollutants released to soil (tons) by type

N/A *3
Establishment of green areas in accordance with laws and regulations at
facilities and the R&D Center:• Fukaya Facility: 0.012 km2• Itakura Facility: 0.043 km2• R&D Center: 0.0080 km2(Biotope created in the R&D Center)
N/A
No contaminants released to soil

* 1: The Itakura Facility site area includes T.HASEGAWA Business Service Co., Ltd.
* 2: Of the total site area of the Kajiyacho Building (0.0060474 km2), the portion owned by the Company is stated.
* 3: With 2020 as the base year, since there are no changes (e.g., purchase or development of new sites) after that year, it is stated as N/A.

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9

The status of the disclosure metrics presented by the TNFD is shown below. Unless otherwise noted, the scope of coverage is on a domestic consolidated
basis and the period covered is fiscal year 2023 (October 2022 to September 2023). The numbers in the table correspond to the TNFD metric numbers.
For items under consideration, we will discuss the response policy and collect information for future updates.
In addition, we will explain the Group’s climate change and natural capital goals.

Indicators and Targets[Core global disclosure metrics: dependencies and impacts] (continued)#

Indicator

StatusAmount of wastewater

BOD
C2.1

Wastewater
discharged

Refer to the Sustainability ReportSS
Wastewater is discharged at factories and laboratories at temperatures inaccordance with applicable municipal ordinances.

Temperature of wastewater
Weight of hazardous and non-hazardous waste generated by
type
C2.2

Waste generation anddisposal

Weight of hazardous and non-hazardous waste disposed ofRefer to the Sustainability Report

Weight of hazardous and non-hazardous waste diverted fromlandfill

C2.3

Total weight of plastics used or sold•••

Proportion of reusable or recyclable plastic containers

Reuse and recycling of plastic containers are under consideration *5

Plastic pollution

Sold plastic (plastic containers of products): 442 tons
Recycled plastic: 175.4 tons *4
Incinerated plastic: 0.5 tons *4

Sulphur oxides
Refer to the Sustainability Report
Nitrogen oxides
C2.4

Non-GHG air
pollutants

Ammonia

N/A

Particulate matter

Under consideration

Volatile organic compounds

Under consideration* 4: Plastic other than product containers.
* 5: Due to the characteristics of flavors and fragrances, plastic containers require high barrier properties; therefore the odor remains in the container after filling, even afteruse. The current process of making the containers odorless increases GHG emissions, so we will continue to examine the reuse and recycling of plastic containers.

Copyright© T.HASEGAWA CO., LTD. All rights reserved

10Indicators and Targets

The status of the disclosure metrics presented by the TNFD is shown below. Unless otherwise noted, the scope of coverage is on a domestic consolidated
basis and the period covered is fiscal year 2023 (October 2022 to September 2023). The numbers in the table correspond to the TNFD metric numbers.
For items under consideration, we will discuss the response policy and collect information for future updates.
In addition, we will explain the Group’s climate change and natural capital goals.

[Core global disclosure metrics: dependencies and impacts] (continued)#

Indicator

Status

C3.0

Water withdrawal and consumption from areas of water scarcity

No operations in water-scarce areas in Japan

Quantity of high-risk natural commodities

C3.1

Quantity of high-risk
natural commodities
sourced fromland/ocean/freshwater

C4.0

Invasive alien species
and other

Measures against unintentional introduction of invasive alien
species (IAS)

Under consideration

Ecosystem condition

Under consideration

C5.0

State of natureSpecies extinction risk

Under consideration

Quantity of high-risk natural commodities sourced under asustainable management plan or certification program, including
proportion of total high-risk natural commodities

Under consideration[Core global disclosure metrics: risks and opportunities]#

Indicator

C7.0

StatusValue of assets, liabilities, revenue and expenses that are assessed as vulnerable to nature-related transition risks

Under consideration

Value of assets, liabilities, revenue and expenses that are assessed as vulnerable to nature-related physical risks

Under consideration

C7.2

Description and value of significant fines/penalties received/litigation action in the year due to negative nature-related
impacts

0 cases

C7.3

Amount of capital expenditure, financing or investment deployed towards nature-related opportunities

Under consideration

Increase and proportion of revenue from products and services producing demonstrable positive impacts on nature
with a description of impacts

Under consideration

C7.1

Risks

Opportunities
C7.4

Targets
For the Group’s goals related to climate change and natural capital, refer to “Indicators and Targets” (Procurement, Environment, Innovation) in the
Sustainability Report.

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11Governance, Risk, and Impact Management

The following describes the Group’s governance structure and management processes for risks andopportunities related to climate change and natural capital.

Governance

Nature and related stakeholder engagement

Sustainability promotion system

The following describes human rights policies andengagement activities related to the assessment andmanagement of nature-related dependencies, impacts,
risks, and opportunities required in the TNFD
Recommendations.

Climate change and nature-related risks and opportunities
are managed within the Group’s sustainability promotion
system.
The person in charge of sustainability at the Company is
the President & CEO. Under this framework, we haveestablished a Sustainability Committee to strategicallypromote sustainability initiatives, including matters statedin the CSR Policy and ESG, across the entire Group. The
Committee develops group-wide business strategies
related to sustainability and deliberates and resolves
important matters, including initiative details.

Based on the T.Hasegawa Group Procurement Policy, theGroup requires its suppliers to consider human rights andconducts stakeholder engagement through supplierassessments and other means. In addition, for some raw
materials, we visit overseas production sites andcommunicate directly with producers and suppliers.

Matters deliberated by the Sustainability Committee arereferred and reported to the Strategy Committee and theBoard of Directors as necessary. In addition, we delegate
authority to related divisions depending on the matter.

Risk and impact management

 Sustainability promotion system chart
Board of Directors
Minutes, report

Approved by

Risk management system
The Group has established a Risk Management
Committee, chaired by the President & CEO, as a Groupwide organization to analyze and manage risks andconsider countermeasures. The Risk Management
Committee deliberates on risk management plans,
including risk analysis and management, evaluation
reports on responses to priority risks, annual risk
management plans, and planning and implementation ofcountermeasures.

Strategy Committee
Minutes, report

Approved by

Board of Directors
ReportRisk Management Committee(Committee Chair: President & CEO)

Auditing
Division

Quality
Assurance
Division

Sales Division

R&D Division

Production
Division

Secretariat: Corporate Planning Division

GlobalBusiness
Division

Administrative
Division

Overseassubsidiaries

Domestic
subsidiaries

Company-wide risk identification and reporting
process
The Group conducts an annual company-wide risk survey
to identify risks in accordance with the risk management
rules. The risk assessment analysis results are reported to
the Risk Management Committee and the Board of
Directors. The Risk Management Committee selects thepriority risks to be monitored according to the analysis
results, and regularly checks them for progress.
Process for identifying and reporting climate change
and nature-related risks
Climate change and nature-related risks and opportunities
affecting the Group’s operations are identified andassessed through an analysis based on the LEAP
approach presented by the TNFD (refer also Strategy
section).

Sustainability Committee
Report Risk Management Committee structure chart

Confirm status ofprogress

Identified and assessed climate change and nature-relatedrisks and opportunities are reported to the Risk
Management Committee, as are other risks.

Related Divisions (business execution)

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1213